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November 20, 2008



Suburban markets tend not to experience the high highs and low lows of big cities, so we weren’t surprised to find out that Westchester County remains a strong office market. Yes, there’s been softening, but it’s poised to bounce back quicker, says Cushman & Wakefield’s Chris O’Callaghan, whom we caught up with in Manhattan.


A lot of factors are working in Westchester’s favor. For example, high barrier to entry makes it an attractive investment location; SL Green recently sold its 205k-SF Christiana Building at 100 and 120 White Plains Rd. in Tarrytown to Juster Development for $48M. There hasn’t been spec office development in Westchester County in 23 years, and replacement value is significantly more expensive nowadays at $300 PSF versus $210 PSF. It doesn’t hurt that rental rates are much lower than nearby Greenwich, Conn. and New York City, in the low $40s PSF versus $60-$100 plus.


No longer is Westchester home to massive single-tenant buildings; if a major corporation goes kaput, the market barely needs a Band-Aid. Now these former corporate homes, like the 600k-SF 1133 Westchester Avenue, which once housed IBM, are multiple tenanted. The Christiana Building, formerly Kraft’s home, now has 40 or so different tenants varying from 10k-30k SF, like insurance firms, hedge funds and back-office law firms. “In a way, we’re far healthier than we were 20-something years ago,” Chris said. Not only is Chris taking care of the Westchester market, he’s been traveling to Egypt to assist C&W in its Middle Eastern and North African operations.

Strong Island!

Long Island’s office market is also holding steady, according to CB Richard Ellis managing director Ellen Rudin, whom we visited recently in her Woodbury office. (She’s no relation to CBRE Tri-State prez Mitch or the famed family builders, but her last name assures that calls get returned.) Although investors are in a wait-and-see period, opportunities should crop up once the bottom of the market is realized. Don’t expect steep drop-offs in leasing or rents in either Suffolk or Nassau, as most tenants want to stay put and work closer to home—spend rush hour on the Northern State or LIE and you’d understand.


Medical offices, in particular, have been sprouting left and right. Many doctors are buying right now, and local banks are financing these smaller deals, especially those with 60% or lower LTV. CBRE’s Long Island office is currently involved in many medical projects, including: Nelin Realty’s 135k-SF med/office condominium at 1500 Route 112 in Port Jefferson Station (top); Tritec’s 30k-SF 4 Technology Drive in East Setauket (bottom); Melbrook Properties’ 25k-SF 4045 Hempstead Turnpike in Bethpage; and The Goldberg Org.’s 225 Community Drive in Great Neck. Law firms, government and entrepreneurial companies are also performing well, she notes.


Ellen, with colleagues Kyle Crennan, Ray Ruiz, Brian Dugan, Rob Seidenberg and Vince LaManna. Another positive of this market is the additional time she gets to spend with family and friends, she says. She’s particularly looking forward to waking up early on Thanksgiving, lighting a fire, and watching the Macy’s parade on TV with her three kids.

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